SEC Reviews Proposal for Ethereum ETF Staking Amid Rising Institutional Interest

The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal by Cboe BZX Exchange, representing 21Shares, to allow the 21Shares Core Ethereum ETF to stake its ether (ETH) holdings. This move, if approved, could generate additional returns for investors.

According to the filing, staking would be limited to ether owned by the Trust and would exclude delegated staking or staking-as-a-service. This follows a similar request from NYSE Arca for Grayscale’s Ethereum ETFs.

The SEC's stance on crypto regulation has evolved, especially since approving spot Ethereum ETFs last summer. Many firms initially removed staking from their applications due to regulatory uncertainty. Under former Chair Gary Gensler, proof-of-stake tokens were classified as securities, but regulatory attitudes fluctuated under the Trump administration, which formed a crypto task force. The task force is now reassessing whether certain tokens should be classified as non-securities.

In December, YouHodler’s Chief of Markets Ruslan Lienkha highlighted the importance of regulatory clarity for staking, suggesting it could boost institutional adoption. Ethereum’s staking feature could attract more liquidity, enhancing its appeal as an investment asset.

Recent 13F filings reveal a surge in institutional interest in Ethereum ETFs, with ownership jumping from 4.8% to 14.5% in Q4. Meanwhile, Bitcoin ETF ownership slightly declined from 22.3% to 21.5%.

As institutional demand for Ethereum ETFs grows, the SEC’s decision on staking could have significant implications for the crypto market. Approval may open the door for more investment products incorporating staking, potentially driving broader adoption and liquidity in the Ethereum ecosystem.